After a period of tremendous popularity in 2007-2008, the SPAC market had come to a near standstill by the middle of 2009. As the credit markets dried up and global economies were undermined, many SPAC investors were simply unable to continue investing in them. One contributing factor was the amount of time required for the SEC to review the disclosure documents relating to the business combinations SPACs propose to engage in. To overcome this obstacle, Loeb & Loeb’s securities team has pioneered a new structure called the IPAC, or an “Innovated Public Acquisition Company.” An IPAC is designed to operate like a SPAC, but permits a business combination to be consummated prior to SEC review.
IPACs enable transactions to close in weeks instead of months. Stockholders are then permitted to redeem their shares after the business combination. By breaking the process into two parts, IPACs allow promoters and target companies to close a transaction quickly, and later contend with SEC disclosure requirements and redeeming shareholders.
Loeb & Loeb spent more than six months working directly with the SEC to ensure that the IPAC structure would be legally permissible.
First IPAC Transaction
Mitchell Nussbaum, Chair of the Securities Department at Loeb & Loeb led the team that developed the new structure and filed the first IPAC earlier this year. The deal closed on November 14 for Loeb’s client Selway Capital Acquisition Corporation – an innovated public acquisition company – as a $20 million initial public offering (2 million units at $10 per unit). Nussbaum and his team at Loeb & Loeb currently have five other IPAC deals in process.
Loeb & Loeb's Securities Practice Group is a recognized leader in representing issuers, underwriters, public companies and emerging growth private companies in initial public offerings (IPOs), special purpose acquisition corporation (SPAC) offerings and acquisitions and private investment in public equity (PIPE) transactions. Our deals have ranged from $2 million to nearly $500 million. We are at the forefront of SPAC transactions with innovative deals that have contributed to their structural evolution. We have represented issuers and underwriters in more than 60 SPAC offerings and over 60 SPAC business combinations.